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MOSL: HEALTHCARE-Mylan’s flagship oral solids’ facility issued warning letter

HEALTHCARE: Mylan’s flagship oral solids’ facility issued warning letter; Advantage Sun Pharma, Aurobindo Pharma, Cadila Healthcare

 

• The USFDA has issued a warning letter (WL) to Mylan’s flagship facility at Morgantown, US, which produces sizable oral solids (OS) portfolio for the US market.
• According to regulatory norms, the WL does not enforce the company to stop production, but may lead to a production slowdown due to execution of remediation measures and/or pro-active steps to resolve the regulatory hurdles.
• Owing to this and based on our product-wise analysis, we believe that potential opportunities could emerge for Sun Pharma (~USD79m, SUNP), Aurobindo Pharma (~USD40m, ARBP) and Cadila Healthcare (~USD35m, CDH), subject to alternative site filing by Mylan.
• We remain selectively positive on companies with (a) a healthy generic product pipeline, (b) readiness to transform towards specialty/differentiated portfolio and (c) consistency to meet regulatory compliance. Our top pick is Aurobindo Pharma.

 

• WL issued to largest oral solids facility of Mylan: The USFDA inspected Mylan’s formulation facility at Morgantown, USA, during 19 March-12 April 2018, and issued 483 with 13 observations (32 pages). Post inspection, the USFDA issued a WL likely due to inadequate response to the observations. According to the WL, there is a lack of sufficient interim plan/comprehensive retrospective evaluation of investigations to ensure implementation of appropriate corrective and preventive action (CAPA). The WL cited significant violations of the good manufacturing practices (GMP) for finished products. Our analysis indicates that Mylan manufactures ~300 OS dosages at this site, making it the largest OS facility of Mylan. Issuance of 483 and the WL does not impose stoppage of production at site; however, given the intensity of the issue, the huge product base and complexity of manufacturing, there could be a slowdown in production due to the implementation of remediation measures to resolve regulatory issues. Other non-compliance instances indicate that companies take pro-active measures to reduce production till compliance is in place. In addition, buyers also try to reduce the risk of non-supply if the matter escalates further by reducing off-take and/or having alternate sources ready to supply.